silver rushSubmitted by Michael Lombardi

Central banks around the globe are printing non-stop. You don’t have to look as far as Japan, South Korea, or Russia to find countries increasing their money supply; our very own Federal Reserve is spending $85.0 billion a month buying mortgage-backed securities and government bonds. That $85.0 billion is “created” each month.

We have already begun to see demand for silver increase significantly. I call it the “Silver Rush.”
Investors will continue to rush towards silver, because it is affordable for them; while central banks will buy more gold, as they can afford it. The rush to silver and gold is fueled by excessive money printing by the central banks, the global race to devalue currencies, and increased inflation.

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The pieces of the puzzle are coming together nicely. As I have been expecting, small investors are running towards silver because gold has become too expensive for them. After all, to buy one ounce of gold it costs around $1,700. With the same amount of money, a small investor can buy upwards of 53 ounces of silver at its current price of $32.00 an ounce.

We have already begun to see demand for silver increase significantly. I call it the “Silver Rush.” It wasn’t too long ago when I reported the U.S. Mint had halted sales of Silver Eagle coins because it ran out of stock. It’s no surprise that the U.S. Mint now reports that American Silver Eagle coin sales in January rose to an all-time monthly high with 7.1 million ounces of silver purchased, compared to 6.1 million ounces purchased in January of 2012.

Investors are running for silver. The Vice President of Blanchard and Company, Inc., a retail coin dealer, said, “Not only do we have clients calling in, they are buying in huge quantities.” He added, “They are buying the entire 500-ounce boxes that are sealed by the U.S. Mint, that’s what people want right now.” (Source: Tang, F., “UPDATE 1-US silver coin sales set record in January after halt,” Reuters, January 29, 2013.)

The U.S. Mint is not the only one experiencing an increased demand for silver. The Royal Canadian Mint (RCM) is rationing the sales of its silver Maple Leaf coins. The Manager of Communications at the RMC said, “Due to very high demand for Silver Maple Leaf coins, the Royal Canadian Mint is carefully managing supply to ensure all our bullion distributors are served and we continue to take orders.” (Source: Cambone, D., “Royal Canadian Mint ‘Managing’ Silver Supply,” Kitco News, January 25, 2013.)

Investors will continue to rush towards silver, because it is affordable for them; while central banks will buy more gold, as they can afford it. The rush to silver and gold is (of course) fueled by excessive money printing by the central banks, the global race to devalue currencies, and increased inflation.

Central banks around the globe are printing non-stop. You don’t have to look as far as Japan, South Korea, or Russia to find countries increasing their money supply; our very own Federal Reserve is spending $85.0 billion a month buying mortgage-backed securities and government bonds. That $85.0 billion is “created” each month.

How high can silver prices go? Silver follows the pattern of gold prices very closely. As gold prices increase, silver prices follow—but much higher percentage wise. Silver prices reached close to $50.00 an ounce in 2011. If the demand continues at its current pace, then $50.00-an-ounce silver is attainable again.

-Michael Lombardi, MBA for Profit Confidential

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  1. So indeed has been speculated it is bigger money private individuals.. How long will this demand carry on and when will small people move in, in droves? Let’s be honest, if someone can afford a monster box, then they are not buying silver because gold is unaffordable to them. They could just as easily buck up for 10 gold eagles or maples.
     
    I look forward to seeing this posted here: a sober look at silver historically in china, and how they may be helping keep price down for their own gain. I’m all for a price explosion mind you..
     

    http://www.24hgold.com/english/news-gold-silver-the-double-whammy-of-geopolitical-gold-games.aspx?article=1077404312G10020&redirect=false&contributor=Antal+E.+Fekete

  2. Not trying to dampen the parade here, but other sites state that Gold and Silver are stagnated and do not see any big movements real soon. I am not talking CNBC either. Based on the rush to equities and the Treasury markets, Euro dropping and the dollar holding ground not to mention the cartel manipulation and shortages, we may be stuck at the price schedule that we are in right now for a longer time. In othr countries Gold and Silver are stronger against the currencies, but not here.

    • Ranger.  I agree with you.  Even though all the fundamentals are in place metals are capped.  At least for now.  The best thing to do is to quit watching the tape.  Get a hobby.  We have to continue to wait.  Now, the price of metals is increasing in other country’s so eventually the price will have to increase in dollars.  We just don’t know when it will happen.  I wouldn’t be surprised at all if prices stay flat for 6 more months or so.  Then, out of no where the price will break out.  I expect that a lot of folks will give up on this wait.  Thats too bad as there are very few alternatives to put your money and it seems a shame to hand the metals back at a big loss to the vultures.

    • Metals are capped, indeed.  Their trading range is carefully managed…..until its not.  Someday we will see a major price change.  Nobody knows when.  All anybody can do until then is to keep stacking…the day will come as surely as the sun rises…

  3. Looked to me like the “rush” to buy monster boxes of silver coins is at the dealer level and not at the individual level.  But, the dealers don’t want to lay in a big inventory unless they are pretty sure they can sell those coins to individual buyers.  Dealers make their money by rolling over their stock, not by holding it.  For them, anything they hold is dead money because they make nothing on it until it sells.
     
    The real question, as I see it, is “why are the dealers buying heavily now?”.  What do they know about the silver market that the rest of us are missing?  I can well believe that there is something afoot here but do not know what it is other than the usual financial incompetence of the Fed, the Gov, and other central banks around the world.
     
    I just made a good sized silver purchase but that has MUCH more to do with routine quarterly buying than it does with anything we are hearing in the news lately.  This is pretty much just DCA-ing the stack with no “hot news” that silver is about to sky-rocket up in price.  It might or it might not.  When stacking, we merely exchange fiat paper for something of historically intrinsic value.  Could this change?  Yep.  But it is one of the better inflation fighting methods available to small investors over long periods of time.  While I really like silver, I sometimes wonder whether I am buying it because I have faith in it or because I do not have faith in the US dollar any more?  Maybe there’s some of each in it.
     
     

  4. Lombardi is one of the good guys. I subscribe to his service.  he called out the SOBs and liars, with opinions and essays focussing on banking, foreign and domestic economies, credit and bubbles, precious metals etc.  He’s worth a read and has solid sources on his newsletters.

  5. What rush?  I own silver and buy whenever I can aford it, but I see no rush upward.  If anything the price has been rushing back from two years ago.
    In fact I’m a little concerned that silver prices will collaspe.  Many of today’s items, from candy bars to cars are only about 10x higher than their 1964 prices — not the current 30x.  I think we’re on the verge here of either silver prices collasping back to 10x or commodies exploding.
    My bet is on the commody explosion, but I don’t know.

  6. While Ag demand in manufacturing is solid, like solar, flat screens, tablets, smart phones, etc the chance of a dramatic collapse is very unlikely. Price may stay static for the near future with slight gains and losses but in this global economic climate stacking seems sensible even wise. A US downgrade, loss of bond confidence, China dumping dollars or any other black swan event, and no one will regret holding silver, in fact they may kick themselves for not stacking harder. It won’t come from the US though, as long as they can print money and keep interest rates down it will most likely be an offshore move ensuring a genuine bull run on silver across the globe.

  7. LIBOR is rigged and the metal markets are rigged right?  If that is correct then it could also be true that the rise in metal prices in 2011 and the following smackdown was allowed to happen as a tactic to trap investor money and demoralize their ranks.  I’m not falling for that ploy.  I’m stacking despite the bankster smoke and mirrors.  

  8. I recently heard Chris Duane stating in an interview that JPM et al let part of the silver short position unravel a bit in 2011 allowing the surge in price, then built it back up right as the COMEX staged the margin hikes, dropping the price like a rock. Anyone have any info on the numbers surrounding the short position? I’m writing something for friends/family and that would be useful. Thanks in advance! 

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